This reminds me of pushback in the early days of Tesla. Sure they can build 1,000, but can they build 10,000. Now we’re at “sure they can build 500,000, but can they build 5M.”
I think the answers “yes”, if the demand is there. And I agree with you that industrial policy could help jumpstart that demand.
It's not a question of demand. A negligible number of customers care where their product is manufactured. They care only about price, which is why manufacturing moved overseas in the first place.
What is needed to manufacture phones in the West is protectionism and mercantilism. Our governments would have to subsidize domestically manufactured products, require the use of domestic products for various industries, and tariff those manufactured in countries with lower labor standards and incompatible civil rights.
Unfortunately such policies lead to higher costs for consumers and lower economic growth. It's politically unpopular for the same reason action on climate change is unpopular: it makes everything more expensive. It's no wonder that virtually all western politicians support neoliberal globalism. Goods are cheap, even if it means some of us lost our jobs in the process.
Worse, these policies also tend to lead to war. One of the big reasons we've had relative peace between world powers for the last 75 years is that our economies have become closely intertwined, so no politician or corporation can stomach the economic costs of war. If global trade starts to break down we'll head directly into World War 3.
Personally I think we should embrace protectionism anyway despite the cost and risk. I'd go so far as ripping up NAFTA. American labor standards are so shit that Canadian companies can barely compete, and it's holding us back from progressive policies like a 4-day work week. Ontario can't even mandate paid sick days! I'd rather we have a well-paid labor force than cheap groceries and electronics. Unfortunately no politician agrees with me.
You've got this backwards. Both taking action on climate change and buying American are popular [1][2]. Furthermore I don't know of much evidence that suggests taking action on climate change will raise prices. But you are right about protectionism in that way. That's the biggest problem here.
In the abstract I see no reason that global trade should breakdown if a significant majority of people in the world can agree about labor standards, human rights standards, etc. In the specific, I believe this was one of the major original purposes of the UN, though unfortunately the world we live in remains one in which the abuses of great powers go unchecked because the cost of nuclear war is too high.
[1] https://www.pewresearch.org/science/2020/06/23/two-thirds-of...
[2] https://www.reuters.com/article/us-usa-economy-madeinusa-pol...
Let's see the results of a poll that asks if people would be willing to take climate action that doubled the price of airline tickets, or that doubled the price of most fruits and vegetables in the supermarket. I would expect a very different result, yet this is what is necessary to offset the emissions in air travel and international shipping. (I pulled this "double" number out of a hat, but it seems to me to be far less ridiculous than your assumption that action on climate change won't affect prices.)
It's the same issue with domestic manufacturing. Of course all Americans want their products to be manufactured in America. But virtually no Americans are willing to pay a higher price for them. Stores long ago stopped bothering to stock American made products next to their cheaper foreign counterparts because no one bought them. What people say they want is irrelevant; what matters is what they actually buy.
> In the abstract I see no reason that global trade should breakdown if a significant majority of people in the world can agree about labor standards, human rights standards, etc.
If a majority of the world agreed on labor standards and excluded the rest from trade, there would be no need for protectionism. Manufacturing would be a level playing field so Americans could compete directly with foreign companies on price. Unfortunately this isn't the world today. It's not possible to compete in manufacturing with countries where laborers are paid under a dollar an hour, so as long as we have free trade with such countries our manufacturing will never be able to compete.
The average American does not want to buy stuff from slaves, at any price.
It's just that if I want to record a factory in China and show people how kids and prisoners are making their shit, it's not that they won't watch - it's that someone in China will shoot me.
It's very hard to show someone what slavery looks like, even though it's pervasive in the offshore supply chain.
People become vegans when they see what happens to animals at slaughterhouses. There are a lot of vegans. The reaction from the meat lobby isn't, blah blah blah prices. It's just to make it illegal to record in a slaughterhouse.
> But virtually no Americans are willing to pay a higher price for them.
This is some really myopic thinking. Just decide: would you pay a higher price to not get stuff from slaves, or not? Just you personally. I don't care what Americans think. How could you possibly say, "Yes, I'm okay with lower prices enabled by slavery." You wouldn't!
I just go and buy American. So I pay four times more for a pair of shoes, setting me back to 2001 prices. A time when quality of life was still very high. Boohoo. I don't want to fucking profit from slavery.
The argument you're engaging in is almost always made in bad faith. While you aren't saying it in bad faith, you're being co-opted by people who are. No CEO or politician sincerely blames Americans' sensitivity to prices for slavery in China, they just want to reap the profits of that status quo.
Since you asked: For me personally, it depends. I bought a lab grown diamond for my wife's engagement ring some years back (before they were generally socially acceptable) since we weren't comfortable with diamond mining. I buy free-run eggs even though they're more expensive. We have a community-supported agriculture subscription and we buy Ontario apples when Costco stocks them.
But like the vast majority of westerners, I buy cheap shoes, despite not knowing where they are manufactured, and despite knowing that almost all shoes are made by questionable labor. I even eat chocolate even though it's virtually impossible to get chocolate that doesn't come from child slave labor. I eat all typical meats despite seeing videos of slaughterhouses, of baby chicks being shredded, etc.
Does this answer your question? I think it proves my point: I consider myself knowledgeable on this stuff and it barely affects my purchasing behavior. No one cares. No matter how many videos of slaughterhouses and labor camps you try to shove in my face, I will still eat steak and buy shoes. People want meat, people want gas, people want cheap goods, and people want to ignore all negative externalities. Information is more accessible than ever, and yet like the sibling comment says, there are not a lot of vegans.
The absolute state of Hacker News.
Can you honestly say you don't buy anything made with questionable labor? Can anyone? Do you know that America has a slave labor force of millions of prisoners? Slavery never really went away in the US; you can't avoid it even if you buy American. For example if you own a car, odds are your license plate was manufactured by American slaves.
For what its worth, we bought my daughter a very nice pair of boots made in Quebec. But it's the only pair she owns that I know are manufactured domestically. They also proudly employ special needs workers, which sounds great except I have my suspicions that it's just a ploy to pay them less. It is absolutely impossible to avoid labor inequality in the modern world.
This is a pretty bold claim considering the American history.
> There are a lot of vegans.
No there isn't. Only a small fraction of people are vegans. So I'd say that according to your example, most people in world are meat eaters despite the sufferings of animals.
China is winning at manufacturing not because of slavery. The Chinese infrastructure is advancing much faster than that of the US. I'm sorry but Your fringe view is clearly out of touch with the rest of the world.
People aren't taking minor, inconvenient, personal, moral steps to solve these problems because it's obvious that won't do anything to solve the problem. It's irrelevant whether or not I shut the water off when I brush my teeth when the farm over in the desert is subsidized to run a center-pivot irrigation in system in the middle of the desert that pulls 800 gallons per minute. Collective action is required, which means that instead of moralizing we need to fix the incentives. The only incentive that is universal is price.
A few people deciding not to fly or buying produce at a local farmer's market instead of the grocery store because they're concerned about climate change is not a signal that's audible to The System.
The problem, and the point of my post, was that collective action can only be done by legislation, and in a democracy politicians are beholden to the electorate. Most people don't want to suffer higher prices for goods and services, so most people won't vote for any politicians that support policies that will have real impact on climate change.
See also: https://www.reuters.com/article/us-usa-buyamerican-poll/amer...
Your first paragraph contradicts itself. Not enough customers demanding their product be made in USA is the very definition of a demand problem.
The context was Teslas. The parent comment suggested that Teslas can be manufactured in volume because there is sufficient demand. While true, the demand for Teslas is not due to the fact that they are manufactured in the US. Tesla buyers mostly don't care where they are manufactured; they just want a fast and stylish electric car. The demand is not for US-manufactured Teslas. It's just for Teslas.
I agree with you that demand specifically for domestic products does not exist, but this is obvious. Demand for domestic products is not really a thing in the first place because the place of manufacture is not a product differentiator for most consumers. There are very few ways to realistically control direct demand for domestic products; laws that force the government to buy domestic are about it. You have to create demand for domestic products indirectly by making them cheaper than the alternative because that's all that consumers really care about.
This is why it's pointless to talk about "customers demanding their product be made in USA". It's not a question of demand because the vast majority of consumers do not and will never care where a product is manufactured.
Money circulates faster with more well-paying jobs which would result from increasing on-shore manufacturing.
I think the key is to phase tariffs in linearly over several years (perhaps even decades). That gives the domestic economy time to adjust wages for the higher price of domestic manufacturing and doesn't have an immediate negative result on foreign countries. It should drive foreign countries to improve human rights and labor laws to avoid tariffs and stay in the market. Domestic investors should see increasing tariffs as an investment opportunity instead of a cost, and balancing the rate of tariff increase could be another tool for the central banks to encourage growth.
> Worse, these policies also tend to lead to war. One of the big reasons we've had relative peace between world powers for the last 75 years is that our economies have become closely intertwined, so no politician or corporation can stomach the economic costs of war. If global trade starts to break down we'll head directly into World War 3.
That's why increasing tariffs slowly is appealing; it doesn't destroy global trade by disruption. Countries with minimal labor laws would face a choice; fully isolate (like North Korea) or gradually improve human/labor rights to remain a functional part of the global economy.
I was under the impression that most of the money saved that way went straight into the companies' (offshore) accounts and CXO's pockets.
10,000 cars is real manufacturing volume. 10,000 electronic something hasn't even reached volume discount status.
There is a reason we call 100,000 units "The Valley of Death" in the electronics industry. Your volume is large enough to hit all the problems but not large enough to get the discounts.
The fact that they succeeded doesn't mean there wasn't a significant chance of failure at each order of magnitude.
In the past 10 years, it became cheaper to buy the same products from China than the US, which is in part due to US shipping companies (DHL, UPS, FedEx) dramatically scaling down their overseas shipping business.
I could get a 5KG box of electronics in a week for $50 ten years ago. Nowadays, there's only USPS, it takes two weeks and still costs more. Kinda sad.
I think the companies have the stomach for more and that it’s mainly a marketing and public relations issue.
https://fair.org/home/us-media-cant-think-how-to-fight-fires...
It's always been a problem, but it's best to make whatever strides to resolve it that we can.
> The US imprisons more than China does
Sure, but it is not currently engaged in a genocide. Standards for due process are also stronger in the US than in China, and you don't get thrown in jail for criticizing the government either.
The US prison system being bad does not make China's abuses any less serious. They are still much worse than what the US does.
And last year showed us just how much due process is ignored and political prisoners persecuted, if previous history wasn’t enough.
That's for people crossing in, and on average they're only in there for a couple days. The current population is around 10k people. It's a problem but it's absolutely nothing compared to putting entire groups into concentration camps. We did that once, but it sure wasn't any time recently.
> And last year showed us just how much due process is ignored and political prisoners persecuted, if previous history wasn’t enough.
It did?
A good read: https://thegrayzone.com/2021/02/18/us-media-reports-chinese-...
The advantage of having semiconductor/electronics manufacturing in the US would be cheap land/labor, quantity of labor, gov incentives, regulation waivers, particularly in the American Southwest: https://www.wsj.com/articles/the-southwest-is-americas-new-f...
> Political tensions with China are one factor.
Specifically - I think that, at the end of the day, the economic flow is the only thing that matters and all the other considerations are sort of moot. What the US offers to the world is a gigantic consumer market, and it's quite difficult to actually control a consumer market since any applications of force or restriction of goods flow ends up deteriorating the market faster than it yields control. If the US embargoed Chinese imports tomorrow the Chinese government would receive a lot of domestic pressure to take action but, logically, there isn't an action it can take overtly to actually reopen the US market - instead we'd see this war play out in propaganda within the US trying to force politicians to reverse the decision by causing mass discontent. And, honestly, it's likely that companies affected by any such embargo would just act independently of the Chinese government to those ends - so, essentially, the only real forces Chinese businesses would have to oppose an economic breakdown are their personally contained forces. I think, essentially, that the Chinese government would be impotent to deal with such a situation buuuut... that's just like my opinion man.
Eh, maybe - often that "something else" is capital sitting on its hands or investing in things that serve to protect its own interests.
I personally think the latter is preferable. Not sure why anyone buys US made equipment post Snowden/Assange.
Worth noting that TSMC started building the 5nm fab this week in Arizona and said last month they would build a 3nm or 2nm fab at the site as well, and were in the research phase for a potential third fab that would focus on older/cheaper nodes.
Intel is also building a fab in Arizona and in March announced a further $20 billion investment in 2 more fabs at its Arizona site.
I'm not sure if they've started building or even committed yet, but it seems likely that Samsung will build a 5nm fab in Texas as well, in addition to its existing fab there.
So there's quite a bit of progress happening on US-based fabs already.
I'm pretty naive on the subject, but in this case why would cost of local labor affect which product is manufactured at any given plant?
Lets say employees A and B are payed $50 and $20 respectively for each product they manufacture. If employee A manufactures product X, which is sold for $100, and employee B manufactures product Y, which is sold for $50, the company makes a net profit of $80 ($150 revenue - $70 manufacturing costs). If employee A makes product Y instead and employee B makes product X, the net profit is still $80. Is there something I'm failing to take into account here?
But from your response (and on re-reading your original post) it sounds like you're actually pointing out that high-volume manufacturers with thin margins have more trouble justifying high US labor costs - in contrast to low-volume manufacturers with high margins.
Problems with scaling production also are more complex than just labor cost, especially when starting up.
Although it sounds like that question may have been borne out of my own misinterpretation of the post to which I was responding.
I will note that Purism do not say what their production capacity is, and that it would probably be a different task entirely to manufacture a significant percentage of iPhones in the US. I’m not surprised that manufacturing thousands of extremely expensive phones in the US is possible. I would be a lot more surprised if they had managed to manufacture millions of reasonably priced phones in the US. The big question is whether the federal government will embrace the industrial policy required to rebuild our manufacturing capacity in high-tech.